Any time you are involved in a complicated endeavor, it is wise to break it down step-by-step. This is certainly applicable to the estate planning process. In this post, we will take a brief look at the different relevant factors that you should take into consideration.
One concern is making sure you have something to leave behind because you really don’t have to be too concerned about estate planning if you have nothing left to leave behind to your loved ones.
How could this happen if you have planned ahead throughout your life to be able to enjoy your retirement years and still have something left to pass along? The answer could be reduced to these three words: nursing home costs.
Most senior citizens will need some form of long-term care eventually, and 35% of elders will ultimately reside in nursing homes. Whether it is fair or not is a subject that is open to debate, but Medicare does not pay for the custodial care that nursing facilities provide for their patients.
This gap is huge, because nursing homes are extremely expensive. In North Carolina and Kentucky where we practice law, you can expect to pay anywhere from $70,000 a year up to six figures depending on the facility. These are the numbers as they stand today, and long-term care costs have been rising on a consistent basis.
Medicaid is another government health insurance program that will pay for nursing home care if you can qualify. Though it is a need-based program that is only available to people with limited resources, you could take steps to protect assets and still qualify.
The timing is key because you have to complete most gift giving at least five years before you submit your application if you do not want to be ineligible for a period of time. These rules are something our elder law attorneys immerse themselves in.
Asset Transfer Methods
Your estate can be distributed in lump sums once and for all after your death like slices of the pie, but this is not always the right choice. For example, you can protect a spendthrift heir from their own bad decision-making, and the inheritance could be kept out of the reach of creditors.
This is one example, but there are many other scenarios that can call for the implementation of more advanced estate planning techniques. You should discuss these matters with an estate planning attorney from our firm when you are putting a plan together.
Elder law and estate planning go hand-in-hand because a thoughtful strategy will include end-of-life matters along with legacy concerns. With this in mind, you should pragmatically address the fact that many people become unable to make sound decisions at some point in time.
How many you ask? Alzheimer’s disease strikes about 40% of the oldest old, and this is not the sole cause of dementia. And of course, dementia is not the only condition that can make it impossible to effectively handle all of your own affairs effectively.
You can include durable powers of attorney to name agents that would be empowered to act on your behalf in the event of your incapacity. We are using the plural because you can have one document that names a financial decision maker and another to designate a health care agent.
A living will should part of the incapacity plan as well. This type of will records your wishes in writing regarding the use of life-sustaining measures like artificial respiration, hydration, and nutrition.
Download Our Free Estate Planning Worksheet!
We have shared some of the basics here, and the icing on the cake is our estate planning worksheet. If you take the time to go through it, you will come away with a thorough understanding of the process. It is being offered free of charge, and you can visit our worksheet access page to get your copy.